the offer that is being made (or the determination that there is no coverage). Then
there is the bad faith allegation along with
the breach of contract allegation.
The more difficult cases, however, are
the third-party, where you’re defending
the insured. The most difficult ones are
where you have a large exposure with a
very good liability defense but a limited
policy. In those cases, you realize if you
don’t win your insured is exposed to liability beyond the limits of the policy.
If a task wasn’t
documented, then it wasn’t
done. To some extent,
it’s the claims adjuster’s
file that goes on trial.
That’s where it becomes the insurer say-
ing, “Settle with them; give them the
money.” Meanwhile, you say, “Well, no,
my evaluation is that we have a very good
chance of winning this case.” As a result,
you get the tension between the insurer,
who is usually aligned with defense coun-
sel. That tension can create friction, as
well as an environment where bad faith
rears its head.
How can claims managers cre-
ate a culture of adherence to
best practices at their respec-
First is training—both in-house and
through organizations that provide semi-
nars. This also applies to having your
lawyers come in and do presentations to
the claims department. Often claims de-
partments are handling several states, or
a dozen states, and you have to know the
laws. What are your obligations? What is
the statute of limitations? Each state has
a little variation as to the requirements.
[Discerning statutes] therefore becomes
a difficult task for the individual claims
handler. You must be acutely aware and
train them to: 1) be aware of the differ-
ent regulations and laws in each state;
and 2) be sensitive enough to go to your
in-house counsel and say, “Help me out
here.” In addition, claims departments
must be willing to spend the money to
ensure their staff is properly trained.